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Justia Weekly Opinion Summaries

Bankruptcy
March 27, 2020

Table of Contents

Corporacion de Servicios v. Commonwealth of Puerto Rico

Bankruptcy

US Court of Appeals for the First Circuit

Steiner v. Wilmington Savings Fund Society

Bankruptcy

US Court of Appeals for the Eighth Circuit

Brown v. Barclay

Bankruptcy

US Court of Appeals for the Ninth Circuit

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Bankruptcy Opinions

Corporacion de Servicios v. Commonwealth of Puerto Rico

Court: US Court of Appeals for the First Circuit

Docket: 19-1202

Opinion Date: March 23, 2020

Judge: Per Curiam

Areas of Law: Bankruptcy

Given the fundamental change in the facts of this case since the appeal was first filed and briefed the First Circuit remanded this action to the district court for reconsideration of its ruling dismissing the claims as unripe. In 2017, two groups of health centers filed adversary complaints in the Financial Oversight and Management Board's Title III case seeking a declaration that their claims against the Commonwealth seeking to collect payments under federal Medicaid law were non-dischargeable under PROMESA and that those claims may not otherwise be impaired in any matter. The magistrate judge recommended that the complaints be dismissed without prejudice as unripe. The district court held that Appellants' requests for declaratory relief were not ripe for review because there was no evidence that the Commonwealth would seek to discharge or impair their claims through the Title III proceeding. After the health centers appealed and the appeal was briefed, circumstances materially changed because the Commonwealth filed an amended proposed plan of adjustment. The First Circuit remanded the case to the district court for reconsideration of its ripeness ruling in light of the changed circumstances and any other matters the court deemed relevant.

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Steiner v. Wilmington Savings Fund Society

Court: US Court of Appeals for the Eighth Circuit

Dockets: 19-6027, 19-6037

Opinion Date: March 23, 2020

Judge: Shodeen

Areas of Law: Bankruptcy

The Bankruptcy Appellate Panel affirmed the bankruptcy court's orders dismissing debtors' individual chapter 13 cases with a bar to re-filing for 180 days. The panel held that the bankruptcy court did not abuse its discretion where debtors acted in bad faith. In this case, debtors have filed eight chapter 13 bankruptcy petitions between 2010 and 2018, and the bankruptcy court found that debtors' filings were part of a long-running scheme to manipulate and abuse the Bankruptcy Code and the bankruptcy system to the extreme detriment of their creditors, particularly Wilmington Savings.

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Brown v. Barclay

Court: US Court of Appeals for the Ninth Circuit

Docket: 18-60029

Opinion Date: March 23, 2020

Judge: Mary Murphy Schroeder

Areas of Law: Bankruptcy

After debtor made unauthorized and fraudulent transfers of funds during the Chapter 13 proceeding, the bankruptcy court converted the proceedings to Chapter 7 in response, and then debtor argued that the transferred funds were no longer in the estate. The Ninth Circuit affirmed the Bankruptcy Court and the Bankruptcy Appellate Panel's determination that the transferred funds should remain property of the Chapter 7 estate, which would mean that the Chapter 7 trustee had authority to recover them. The panel held that debtor transferred the funds with the fraudulent purpose of avoiding payments to creditors and those funds remained within his constructive possession or control. Therefore, the funds should be considered property of the converted estate under 11 U.S.C. 348(f)(1)(A).

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